Economists generally accept the proposition that the optimal level of holding international reserves is mandatory, to ensure the stability of balance of payment. However, examining the determinants of international reserves is an important challenge not yet satisfactorily confronted by the profession in developing countries, especially ASEAN countries. Based on a dataset covering five ASEAN countries and using bounds testing approach proposed by Pesaran et al. (2001), this paper provides strong evidence that long-run reserve demand in ASEAN-Five can be characterized as a stable function of imports, uncertainty and the opportunity cost of holding reserves with strong economies of scale.  Source ICFAI Journal of Industrial Economics; May2008, Vol. 5 Issue 2, p7-20, 14p. Authors: Kim-Lan Siah & Chee-Keong Choon.  [Download]